Fin-X Weekly 15th December 2025

Global equities initially rallied after the Federal Reserve cut rates and brought forward Treasury Bill purchases, easing year-end funding pressures but steepening the yield curve. 

The US JOLTS report indicated downside risks in this week’s employment report despite a resilient headline number. 

Australian data also signalled a cooling labour market, even as the RBA held rates steady and delivered a more hawkish outlook for 2026. 

China’s trade surplus reached a record level, reinforcing global deflationary pressures and prompting renewed policy emphasis on reviving domestic demand.  

The main events this week include several central bank decisions, delayed US labour and CPI data, Chinese activity figures, and the S&P Global flash PMI releases. 

Equity markets rallied after the Federal Reserve delivered the widely expected interest rate cut and announced that it would add liquidity via Treasury Bill purchases earlier than anticipated. The move is likely to ease stress in funding and repo markets around year-end. The meeting was more dovish than expected, and the Treasury curve steepened, with the 10-year Note yielding 4.18%, the highest level since September. 

Higher long-term yields and disappointing results from Oracle dampened sentiment towards the end of the week. Sales fell short of analysts’ estimates while spending on AI infrastructure surged, raising concerns about profitability and sustainability and reviving fears of an AI bubble. Global equities declined in Friday’s session, and the Australian market is expected to open around -0.6% lower today. 

The FOMC cut the policy Federal Funds rate by -0.25%. Unusually, there were three dissenters. Two preferred to hold rates at 3.75%–4.00%, citing ongoing inflation risks, while recent White House appointee Stephan Miran argued for a larger -0.50% cut. Chair Powell confirmed that risks are skewed towards both higher unemployment and higher inflation due to tariffs, which he described as a “challenging situation”. 

As US data continues to catch up following the government shutdown, the September and October job openings and labour turnover surveys (JOLTS) were released concurrently. Job advertisements increased, but weaker hiring and quits, alongside rising layoffs and job losses flagged in the recent ADP reports, suggest that this week’s November labour report may contain some disappointing figures. 

The US Fed Funds rate now sits in a 3.50%–3.75% range, broadly comparable with the Reserve Bank’s cash rate target of 3.60%.  

The Australian dollar strengthened after the RBA held rates steady on Tuesday, citing broadening inflation risks and improving domestic demand. The Governor noted that a rate cut was not considered at the meeting, while the Board discussed the possibility that rates may need to rise at some stage in 2026. 

Australian data released last week was somewhat less upbeat. The NAB survey, also published on Tuesday, was weaker than expected as trading and profitability readings subsided. Thursday’s labour report showed employment falling by -21.3k in November, well below expectations for a +20.0k gain. The unemployment rate held at 4.3%, after a sharp decline in the participation rate from 67.0% to 66.7%. The labour market still appears to be gradually cooling. At the same time last year, unemployment stood at 3.9%. In contrast, recent national accounts data showed the economy expanding by +2.1% to the end of September. Sean Crick, ABS head of labour statistics, explained that “the number of employed people has risen +1.3% over the past 12 months, which is weaker than the +2.0% growth in population”. 

The central banks of Canada and Switzerland also held rates steady. This week, the European Central Bank, the Swedish Riksbank and the Norwegian central bank are expected to leave policy unchanged. The Bank of England is priced to cut rates by -0.25% to 3.75%, while the Bank of Japan is expected to lift rates to 0.75% on Friday, marking its first increase since January. 

China’s trade surplus expanded more than expected in November, driven by a +5.9% yoy rise in exports in US dollar terms. Comparatively lacklustre growth in imports of +1.9% yoy is symptomatic of ongoing challenges in the domestic economy and contributed to the increase in the surplus. For the first eleven months of the year, it exceeded US$1.0 trillion for the first time on record, up more than +20% on the same period last year. Despite the tariff truce, exports to the US fell sharply, declining by -28.6% in November. Exports of rare earths accelerated, with shipments rising to 5,494 tonnes, up +24% from a year earlier. 

Chinese CPI and PPI outcomes were broadly in line with expectations at +0.7% and -2.2% respectively, reinforcing the view that Chinese goods are a disinflationary force globally. 

Politburo guidance signalled a pivot towards stronger support for domestic demand, while maintaining a targeted and coordinated stimulus approach rather than a broad credit expansion. Policymakers emphasised the need for greater coordination in response to an “international economic and trade battle”. Support is expected to at least match this year’s level, with fiscal policy likely to take a leading role alongside incremental monetary easing. The Politburo reaffirmed its stance of “implementing a more proactive fiscal policy and moderately easing monetary policy”, using the same language as a year earlier. 

The US released a new National Security Strategy last week that differs materially from previous policy, including that under the president’s first term. The strategy prioritises defending the homeland and Western Hemisphere, linking security closely to migration control and economic strength, while continuing to deter China and manage Russia and Iran. The strategy also adopted a more hawkish tone towards NATO allies, urging Europe to dismantle the European Union and allow greater access for far-right parties. Critics argue that the framework is internally inconsistent and may entrench a shift from American hegemony to a more fragmented, less stable multipolar world, with some noting similarities to elements of Russian policy.  

Even though the administration appears to be steering defence policy in a different direction, the House of Representatives passed a bipartisan bill that continues to direct funding towards European defence. The 2026 National Defense Authorization Act (NDAA) bars troop levels on the continent from falling below 76,000 for more than 45 days and blocks the removal of major equipment. The bill will now pass to the Senate. 

The US authorities seized the oil tanker “Skipper” off the coast of Venezuela last week. Officials stated the vessel was transporting sanctioned oil from Venezuela and Iran, breaching US sanctions and a prior Treasury designation that linked the ship, then named Adisa, to a smuggling “shadow fleet” associated with Iran’s Islamic Revolutionary Guard Corps–Quds Force and Hezbollah. Despite the development, Brent crude prices declined by -4.1% over the week. 

Looking ahead, in addition to multiple central bank meetings, China’s monthly activity data will be released later today, followed by S&P Global Flash PMIs tomorrow. The US November labour report, ADP employment update and limited CPI figures are also due. Europe will see the release of the ZEW and IFO surveys, alongside Japanese CPI, the Westpac Consumer Confidence survey and RBA credit statistics.   

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